For those skeptical there could be such a big drop, useful background is that the Danish registration tax for new vehicles is 150% of the purchase price (with roughly the first €10k exempted). Previously it was 180% of the purchase price above €10k, but electric cars were exempted. An agreement was reached among several parties in 2015 to lower the overall rate from 180% to 150%, but to phase out the electric-car exemption. This hits Tesla's high-end cars especially hard, e.g. the model that used to cost €100k will end up costing €200k+ after tax, which obviously is attractive to many fewer buyers. Previously the €100k tax-exempt Tesla was effectively competing against gasoline models in the €40k pre-tax range.

I would expect a less dramatic decline for lower-priced electric cars, some of which do also have sales in Denmark, like the Nissan Leaf or Volkswagen e-uP, but I haven't found numbers.

A 150% "ownership" tax is also in effect in Singapore. The result is fewer cars, less congestion, and tons of tax money to be invested in public transportation.

I guess the system works as well in Denmark as it did in Singapore (I lived in Singapore form 2010 to 2012).

Wow these taxes sound out of this world (in my home country Poland, it's 3% or 17%, depending on the engine size).

Hasn't anyone attempted to go around it by finding someone in say Germany to register the car as a first owner and then immediately purchasing the car (as a used car now) from him?

Used car imports also get taxed by the same percentage. And you can't cheat, because they decide the value of the car, not your receipt.

What limitations are there for just using a German registered car?

That's one of the main arguments that is being brought up here in Estonia when the socialists try to create a car registration tax. The opponents claim that people will just go a bit south to Latvia and register their car there, and then just drive around with a Latvian registration. There aren't any restrictions that prohibit this.

Similar behavior exists with alcohol. The Finnish are especially well known for their alcohol-tourism into Estonia. They come here during weekends and buy multiple crates worth of alcohol and go back. Two-way ferry ticket from Helsinki to Tallinn can cost as little as 10 € during sales, so economy-wise it can be cheaper even if you just want a 6-pack of beer. The funny thing is that as years have passed and Estonian alcohol tax has risen, we're now in a situation where southern-Estonians drive to Latvia to get their alcohol. That's also why the car registration point is so clear to us, because we're already seeing it with consumables where you have to make regular trips instead of a single one.

You can drive a German-registered car as a tourist who isn't resident in Denmark, but if you move to Denmark and become a resident (or already were resident), you must register the car in Denmark within 30 days of bringing it into the country [1].

But yes, some amount of this happens. The easiest case to get away with it is probably if you are actually from another EU country, and just keep it registered in your home country at a relative's address, and travel back occasionally to keep your license, insurance, and registration up to date. If you're Danish and have no foreign address, it would be more complicated to get it sorted out, especially with insurance, but I'm sure there are people who do it. Police attempt to crack down on it by looking for foreign-registered cars that seem to be parked too regularly in the same residential area (e.g. in front of a block of flats in Copenhagen). That's not illegal per se, since you might be a longer-term visitor, but they investigate these cases and catch some number each year.

Besides foreign-registered vehicles, the other most common evasion mechanism is probably agriculturally registered vehicles (which are exempt from tax). Hard to do if you have no connection to a farm at all, but in families where some of the family are genuinely farmers, the rest of the family who aren't will in some cases end up with all their vehicles registered at the farm.

[1] https://www.skat.dk/SKAT.aspx?oId=2068721

I wonder what happens if you're leasing the car? Technically it's not your property, so you can't register it.

I'm sure there's some kind of mechanism to prevent people from driving cars leased in another country, but how does it work?

You're just not allowed to drive that car in the country. The European Union common market and free movement of goods doesn't apply to cars when the tax revenue of governments is at stake. Finland has had a somewhat similar car taxation as Denmark, and here the government breaks EU law at will; when some procedure is ruled illegal by EU courts, the government replaces it with a new wording and the circus starts all over. No official is ever held accountable.

How does police find those who drive a foreign vehicle illegally? Stop a vehicle in foreign plates, ask driver's license; if it is a local national driving, investigate. Police have very much powers in Nordic countries for these cases (they can always stop a car and investigate, there's no American type requirement for a probable cause.)

And of course, there are always people who report suspected tax evaders to the police.

There used to be a sort of a hunt for these cases between Sweden (who has no car sales tax) and Finland. E.g. there was a guy who lived in Haparanda on Swedish side and had a girlfriend in Tornio on the Finnish side, and stayed too many nights at the girlfriend's place. He got a big fine and had to pay back taxes because he should have registered himself as a local resident and imported and registered the car to Finland as well, including paying the car import tax.

I sold my first car to a Norwegian friend. It was a wreck so I sold it for the equivalent of 50 € (this was 1990). The friend then moved back to Oslo. She was asked to pay the equivalent of about 2000 € in car tax to register it in Norway. She gave it for scrap instead, of course.

Leasing is not that expensive in Denmark in comparison to ownership. Also, due to extreme rusting of your car after a few years due to road salt, I find it gives more peace of mind.

If you are a permanent resident, you can't drive a vehicle with foreign number plates. That rules out leasing abroad.

Many people live in Malmö but work in Copenhagen precisely to avoid this restriction.

You can't drive a foreign car if you are a permanent resident in Denmark, I think. People in my workplace used to try what you suggest, but it doesn't work. If police stops you and they discover you are in fact living in Denmark you will get an enormous fine.

Leasing is usually a better deal in this case. You can get a small car for around 1500 kr / month.

What if you work for a foreign company that gave you a company vehicle?

I did the same for about 3 years in UK, and it was fine,even the local police and DVLA confirmed that I'm not braking any laws doing it, even though the law is structured in the same way - if you are a permanent resident you can't drive a foreign vehicle in the UK. Except if you work for a foreign company that gave you a company vehicle to use then yes,you can, and there doesn't seem to be any restriction on it.

As far as I know, what you just described is the only "loophole" in existence, and it is supposed to work in any EU country because of some weird nondiscrimination rule. There was even some ECJ ruling on it, if I remember right.

For example: I know of a Dutch guy who leases a Ferrari through a Belgian company he set up for this, because it would cost him twice as much in the Netherlands. There are also examples of Belgian people driving cars with Luxembourg plates, etc. This is not illegal (though it's obviously a form of tax avoidance)

The Danish tax authority has this mentioned in their FAQ [1]. They claim that this is true but, 1) "it is a requirement that your vehicle is primarily used for business purposes abroad", and 2) you must "apply to be exempt from registration tax".

[1] See the question "Foreign company cars" here: https://www.skat.dk/SKAT.aspx?oId=2068721

Might just be their interpretation of the law though. It could very well be impossible in Denmark, but if some EU law is making it possible, local law can't block it (even though they might want it to). And even if local law is blocking it, it might be in violation of EU law.

Given we're talking a €100-120K tax difference on expensive cars, you can always consult a Danish tax lawyer and if he thinks it's doable do it anyway. If the tax authority has a problem with it then, then you just take it to court. Seems worth investigating.

How is this possible? How can anyone afford a car under such conditions? I believe you, I'm not saying you're making it up, but it's inconceivable.

So a $20k car is $45k? What the #(%^@! ???

They can't. The point is that you shouldn't have a car unless you absolutely need one(most people don't) and then when you do,you should buy a second hand car, that's far more ecological than production of a new vehicle.

I mean, I personally disagree with this approach as I love driving and buy new cars, but I can see and understand why they do it that way. Denmark has extremely well developed public transport and most people get along without cars just fine.

That was more true when it was introduced, and I think the taxation did succeed in slowing the mass adoption of cars in Denmark compared to in some other countries. But once Denmark got rich enough, much of the population bought cars anyway (now around 50%). It's a luxury, sure, but in a rich country, many people buy luxuries, even when there's a luxury tax. I think the tax mostly delayed the mass proliferation of cars to the 80s/90s, instead of the 60s/70s. And it may have also encouraged cheaper cars than would otherwise have been bought, since buying a $20k pre-tax instead of a $30k pre-tax car saves you $25k, not $10k.

Nowadays car ownership is popular enough that I'm not sure you could successfully introduce such a tax if people were not already used to it existing, and used to current new-car prices. When it was introduced, cars were seen as a rarer luxury than they are now, so a luxury tax was not too unpopular, and many people were also swayed by arguments that they had a significant negative social impact, on things like pollution and traffic and injuries, that should be paid for by taxing them [1]. But since it exists, if you cut it, you have to either raise some other tax, or cut some spending program, to account for the revenue; and you probably also have to build more roads and parking to account for the extra cars. That kind of change isn't so popular, and cars (especially new cars) are still culturally seen as not quite a necessity, so keeping the not-that-loved new-car tax remains less bad politically than the alternatives. Though it being lowered from 180% to 150% is a sign that consensus around it is not as strong as it once was, and I wouldn't be surprised to see more incremental cuts in the future.

[1] E.g. one 2009 analysis found that, even accounting for all the taxes, cars still have a 15% negative impact (costing society $1.15 for each $1.00 paid by car owners): http://www.copenhagenize.com/2012/10/danish-180-tax-on-cars-...

That article is from March 2016, so it was 2 cars sold by March. Would be interesting to see final numbers (12 cars?)

Indeed, the article does not represent the 2016 sales at all. Tesla sold 176 cars in 2016 in Denmark and 2738 in 2015 [0]. While there is definitely a drop, the sales of 2015 were probably also boosted by the fact that lots of Danes, who were interested in buying a Tesla, made sure to do so before the law took effect. In 2014 they sold 460.

[0]: http://www.bilimp.dk/statistics/index.asp

Possibly Fiscal Year, ending in March?

You'd expect that the impending new tax pulled a bunch of otherwise 2016 purchases into 2015, but still... yikes!